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TMI Blog1962 (4) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... in rejecting this argument. - Civil Appeal No. 368, 369 of 1961, - - - Dated:- 2-4-1962 - SINGH B.P., GAJENDRAGADKAR P.B., WANCHOO K.N., RAJAGOPALA AYYANGAR N. AND VENKATARAMA AIYAR T.L. JJ. K.N. Rajagopal Sastri, Senior Advocate (P.D. Menon, Advocate, with him), for the appellant (in both the appeals.) A.V. Viswanatha Sastri, Senior Advocate (T. Satyanarayana, Advocate, with him), for the respondent (in both the appeals). -------------------------------------------------- The Judgment of the Court was delivered by AYYANGAR, J.- These two appeals are before us by virtue of certificates of fitness granted by the High Court of Andhra Pradesh under Article 133(1)(c) of the Constitution. The State of Andhra Pradesh is the appellant in both the appeals and one Kolla Sreerama Murthy- a dealer in gunnies-is the respondent in each of them and the point involved relates to the liability of the respondent to sales tax in respect of the transactions to which we shall later refer. Civil Appeal No. 368 of 1961 arises out of Original Suit No. 268 of 1951 in the file of the District Munsif's Court, Rajahmundry. by the respondent for setting aside an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f movable property and also includes all growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale". "'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge." The only matter therefore which is in controversy between the parties is as to whether the transactions to whose details we shall presently refer, which the respondent admittedly entered into, were or were not "sales of goods" within the Madras General Sales Tax Act (Act IX of 1939) so as to enable the turnover represented by these sales to be brought to tax under the Act. We shall now set out the nature of the transactions which the learned Judges of the High Court have held have not resulted in "a sale of goods" by the respondent so as to attract the tax under the charging section in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hardly be stated that at each endorsement of the delivery order the price of the bales represented by the quantity specified in the delivery order would be collected by the successive endorsers which would, in most cases, include the profit, if it was a rising market. The case in the Courts below as well as before us was argued on the basis of this pattern of dealing. The learned trial Judge and the appellate Courts including the learned Judges of the High Court came to the conclusion that on these facts there was no "sale of goods" by the respondent, because the transaction so far as he was concerned consisted merely of the endorsement of the delivery order issued by the mills and that the fact that the ultimate endorsee of the delivery order got delivery of the goods from the mills was treated as irrelevant for considering whether by the transfer of the delivery order coupled with the delivery of the goods to such endorsee, there was in fact a completed sale effected by the respondent. Put in another form the argument which was upheld by the Courts below was that the transactions entered into by the respondent were mere sales or transfers of delivery orders and not any "sale of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in existence on the date of the agreement, they were existing goods on the date the delivery order was issued, and they would have been appropriated to the contract and property in the appropriated goods would have passed to the respondent if he had cared to present the delivery order at the mills godown. The respondent however with- out taking delivery himself, endorsed the delivery order and enabled his endorsee to take delivery, and that endorsee (and it makes no difference to the principle if a further endorsee from him did so) took delivery of the goods and the goods became appropriated to the contract and property in goods passed to him. One view to take, and it was this that found favour with the Courts below, was that since no goods had been appropriated to the respondent's contract before the delivery orders were endorsed, the successive endorsements of the delivery orders were not "sales of goods" but were merely transfers of the delivery order as some paper, though this was of some value in that it enabled the endorsee to approach the mills and obtain delivery of the goods. The result of the acceptance of this view would be to eliminate the respondent altogether from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that it is this principle that forms the basis of the decision of this Court in Bayyana's case [1961] 12 S.T.C. 147; A.I.R. 1961 S.C. 1065, and that it would equally apply to the facts of the present case. Learned counsel for the respondent placed some reliance on the penultimate paragraph of the judgment in Bayyana's case [1961] 12 S.T.C. 147; A.I.R. 1961 S.C. 1065, where this Court referring to the judgments now under appeal stated: "The facts were different, and the Division Bench itself in dealing with the case, distinguished the judgment under appeal, observing that there was no scope for the application of the principles laid down in the judgment under appeal, because in the cited case, the property in the goods did not pass from the mills to the assessee and there was no agreement of sale of goods to be obtained in future between the assessee and the third party.' " We are unable to read this observation as a decision by this Court that the High Court was right in distinguishing the earlier decision. The circumstance that in Bayyana's case [1961] 12 S.T.C. 147; A.I.R. 1961 S.C. 1065, besides the contract of purchase of the gunny bags there was a further agreement th ..... 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